2023-05-08 17:30:06
It is increasingly expensive to borrow in Argentina. Since last March, when inflation gave the first signs of slowing down, the Central Bank (BCRA) was forced to raise interest rates. It is a decision that directly affects the pocket of Argentines: personal loans become more expensive and the cost of financing credit cards increases.
This caused the first data on the impact on consumption to be recorded in April. Last month, operations through credit cards registered a nominal increase of 6.7% compared to March, a figure that would be below inflation. In total, a balance of about $2.6 trillion (exactly $2,606,987 million) was registered, according to a survey by First Capital Group. In year-on-year terms, it grew a nominal 85.7%, well below the Consumer Price Index.
For Guillermo Barbero, a partner at First Capital Group, there are several factors that will continue to limit growth. Among them are the rise in the cost of financing, the lower offer of installments, the limitations in family budgets, the decrease in the number of cardholders and the prudence in the face of risk on the part of financial entities. “The credit limits begin to be gradually updated as the year goes by, although not in a massive way”, he added.
In May, the effect could be even greater. To stop the currency run, the Central Bank moved interest rates to values that had not been seen for 20 years. Credit card financing began to have a nominal annual rate (TNA) of 80% for amounts less than $200,000 or US$200, and 107% if higher. The total financial cost (CFT), the value that consumers actually have to pay, it climbed to 153% and 242%, respectively.
The same thing happened with the line personal loans. In April, it registered a nominal increase of 5.7% monthly, which would be a setback in real terms. The balance rose to $1,327,076 million for the accumulated total, presenting an interannual growth of 67.5%, compared to $792,079 million at the end of the same month of the previous year.
“The rise in lending rates that has been taking place in recent months has caused the values of the interests included in the installments to rise, which has decreased the capital that is canceled with each one of them”, added Barbero. In other words, at equal installments, if the interest is higher, the borrowed capital must be lower.
According to the First Capital Group survey, personal loans are a widely used tool to deal with unforeseen expenses, pay debts or invest in personal projects. When the number of loans tends to grow, it usually reflects “that many people have difficulties making ends meet due to inflation,” job instability, and low wages.
“This scenario of rate increases can have a significant impact on users of personal loans, who may find that the amount they have borrowed is not enough to cover their needs or that the cost of the fees has become too high in relation to their ability to pay. For this reason, it is essential that applicants for personal loans carefully evaluate their ability to pay and the costs of the line of credit before making a decision, ”he warned.
THE NATION
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